WASHINGTON The White House said today that the giant federal takeover of troubled mortgage giants Fannie Mae and Freddie Mac might have been prevented if Congress had acted on its recommendations for changing the system.
"It is exactly the kind of event we warned about and tried to prevent over the years," White House press secretary Dana Perino said. "Remember that we have highlighted the systemic risk posed by Fannie Mae and Freddie Mac because of the very large role they play in housing markets and because of their business practices."
She said that the White House has asked Congress "for years" to establish a strong independent regulator to oversee the institutions.
Perino also highlighted that the takeover will allow time for Congress and the next administration to determine the appropriate future role for the companies. She said their primary mission should be to increase the availibility and affordability of home mortgages.
"Whatever eventual longtime solution is decided for Fannie Mae and Freddie Mac," Perino said, "it is crucial that there are reforms so they do not pose similar risks to our economy or the financial system again."
President Bush said he is pleased with the action and believes "it will stabilize the markets."
"I wouldn't call it a bailout," he said in an interview conducted Sunday with Fox News Channel's Fox & Friends show, and set to air Tuesday. "I'd call it a stabilization."
Perino said the nation's "economy will not return to strong job growth until the housing correction is behind us."
Perino was pressed repeatedly about how Bush a fiscal conservative could champion such a historic government takeover and intervention in markets.
"This is not action that we wanted to take. It's action that we needed to take," she replied.
Analysts were split on how much the takeover could eventually cost taxpayers although they all agreed the upfront costs will be substantial, possibly hitting $100 billion as the Treasury is called upon to bolster the capital cushions at both institutions. Perino said the administration is moving "to make sure that the taxpayers would be paid back first."
"The goal is to prevent additional risk to the taxpayers," she said.